In the news this week

Author: John Crabb, Karry Lai, Olly Jackson | Published: 26 Oct 2018

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Asia Pacific: public v private

China’s State Council released a statement
emphasising China’s need for stable growth while
managing risks and maintaining a prudent and neutral monetary
policy. According to data released by the National Bureau of
Statistics, China’s GDP growth rose 6.5%
year-on-year in the July to September period, which is the
weakest since the first quarter of 2009. Vice premier Liu He
indicated that the government’s focus will be to
take measures to reduce the burdens on private firms by
expanding their access to financing and improving the financial
sector’s ability to boost economic activity.

To restore market confidence after the Chinese equities
markets fell to their lowest since 2014, the Chinese regulators
are unveiling policies to bring more stability to the financial
markets. The China Banking and Insurance Regulatory Commission
is consulting on a draft plan to allow funds from products
publicly sold by commercial banks’ wealth
management subsidiaries to be directly invested in stocks.
Additionally, the Securities Association of China is setting up
a new RMB100 billion ($14.4 billion approximately) fund to lend
to private companies that are relying on share pledging as
collateral for loans.

Americas: instability is the word

This week brought us earnings season in the US, but also
stock market instability. Most of the country’s
exchanges ended saw trading hit lows not seen in nearly 10
years, as indices lost of the gains they had made since the
start of the year. The general sell-off in the market came as
little surprise to many, after rising interest rates, an
uncertain and restrictive US trade policy and general
overvaluation of stocks ramped up the pressure on trading.

The Securities and Exchange Commission’s Market
Data Forum on October 25 and 26 signals the regulator is
intensifying scrutiny of the fees that some exchanges charge
brokers for access to market data. The event follows
commissioner Robert Jackson’s recent criticism of
exchange charges, and a recent decision by the SEC that Nasdaq
and the New York Stock Exchange had to justify past fee
increases and reviews decisions associated with fee decisions.
"The US equity capital markets are the envy of the world,"
Nasdaq’s chief executive said. "The SEC should
take a very careful and deliberate approach to considering the
consequences of changing the structure that exists today and
that clearly benefits millions of investors."

EMEA: taking stock

In an unprecedented step, the EU has rejected
Italy’s budget, saying that the first draft
presents a 'particularly serious non-compliance’
with its rules. The Italian government has three weeks to
propose a new budget to the Commission, but there are no signs
of the government backing down from their aggressive spending
plans. The ruling party, Five-Star Movement, has been
notoriously Eurosceptic ever since its formation and there are
fears that the rejected budget will be seized upon as a basis
for a referendum on Italy’s future within the
EU.

The implementation of the General Data Protection Regulation
(GDPR) has been harder for companies than initially first
thought; this, despite it being widely acknowledged as one of
the most widespread changes to data protection ever, before it
came into force last year. "The exponential increase in
individual requests for accessing data and deleting data has
caught many companies by surprise," said Eduardo Ustaran,
partner at Hogan Lovells.

The ongoing appeal case involving the International Bank of
Azerbaijan could lead to the reversal of a century old UK
insolvency rule, which could make financing in smaller
jurisdictions more expensive. While the future of the Gibbs
rule is not at stake in the current case in the Court of
Appeal, if it goes to the Supreme Court the state of UK
insolvency law could be fundamentally altered. "In the event
that Gibbs is overturned by the Supreme Court, the starkest
scenario and most extreme outcome would be if this has
retrospective effect. This would cause many people to revisit
existing English law contracts and to think about other
protections might be available to them," said Dechert partner
Adam Silver.